Yesterday the Securities and Exchange Commission took two significant actions relating to the MD&A disclosures in annual and quarterly reports of public companies.

First, it proposed amendments to MD&A requirements that would, if adopted, make significant and long-overdue improvements to a central disclosure requirement of the U.S. securities laws. Second, it issued guidance on the

Insider trading law has remained a subject of significant debate and attention, including with a recent Second Circuit decision addressing the use of 18 U.S.C. §§ 1343 (wire fraud) and 1348 (securities fraud) in insider trading cases[1] and a new insider trading bill that passed the U.S. House of Representatives in December by an overwhelming majority.  Yesterday, a blue ribbon task force headed by Preet Bharara, the former U.S. Attorney for the Southern District of New York, published a report studying the history and current state of insider trading law and proposing reforms that would bring greater clarity and certainty to the law.
Continue Reading Task Force Led By Preet Bharara and Cleary Gottlieb’s Joon H. Kim Issues Report Recommending Reforms to Insider Trading Law

The Second Circuit has made it easier for federal prosecutors to bring insider-trading cases.  In United States v. Blaszczak, decided on December 30, 2019, the Court held that the personal-benefit test—a judge-made rule that the government must prove a tipper expected to receive some benefit in exchange for disclosing confidential information—does not apply to

On January 7, 2020, the U.S. Securities and Exchange Commission (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”) released its 2020 Examination Priorities (“2020 Priorities”).  While at first blush the themes appear consistent with and predictable from their 2019 priorities, on closer read OCIE has provided some new insights and some unexpected focus areas.  The themes for the 2020 Priorities are:  retail investors, information security, financial technology (“Fintech”) and innovation (including digital assets and electronic investment advice), several areas covering registered investment advisers and investment companies, anti-money laundering, market infrastructure (clearing agencies, national securities exchanges, alternative trading systems, transfer agents), and oversight of the Financial Industry Regulatory Authority and Municipal Securities Rulemaking Board programs and policies.  OCIE also stressed the challenges it faced in light of last year’s government shutdown and resource constraints, as the Division of Enforcement did in its 2019 Annual Report (see our analysis here), and the challenges in examining non-U.S. advisers due to limits that foreign data protection and privacy laws may place on cross-border information transfers.  In this post, we analyze the highlights in and our takeaways from the 2020 Priorities.
Continue Reading From the Expected to the Surprises: Highlights of SEC OCIE’s 2020 Priorities

On Tuesday, November 12, 2019, the U.S. Federal Trade Commission (“FTC” or “Commission”) announced a proposed settlement with InfoTrax Systems, L.C. (“InfoTrax”), a third-party service provider, regarding multiple data security failures.  As a result of these security shortcomings, a hacker accessed about one million consumers’ sensitive personal information after more than twenty intrusions into InfoTrax’s network.  This settlement marks one of the first instances in which the FTC has alleged a violation of the FTC Act predicated solely upon the failure to maintain reasonable security measures by a third-party service provider.  The settlement is also notable for a Commissioner’s concurring statement criticizing the settlement’s standard twenty-year term.
Continue Reading Latest FTC Data Privacy Settlement May Signal More Direct Approach to Regulating Data Security

On November 6, 2019, the SEC’s Division of Enforcement released its annual report (the “Report”) describing its enforcement actions from fiscal year 2019.[1]  Like prior reports, the Report quantifies the Division’s activities in a number of ways and discusses priority areas going forward.  The Report also brings front-and-center certain challenges the Division has faced – including difficulties navigating recent Supreme Court decisions that call into question the constitutionality of the SEC’s administrative proceedings and the agency’s ability to obtain disgorgement, as well as the impact of the government shut-down and general resource constraints.
Continue Reading Headwinds and Shifting Priorities: Beyond the Numbers In The SEC Enforcement Division’s 2019 Annual Report

On November 1, 2019, the Supreme Court granted certiorari in Liu v. SEC to decide whether the Securities and Exchange Commission can obtain disgorgement as an equitable remedy in federal court enforcement actions.

The certiorari grant in this case is unusual, because the circuit courts that have considered the issue have all agreed that the

The final version of the California Consumer Privacy Act of 2018 is coming into view.

On October 10, California’s Attorney General released the long-anticipated draft regulations to implement the CCPA, and on October 12, the Governor signed into law five amendments to the CCPA passed during the 2019 legislative session.  (We previously discussed the CCPA 

On July 25, 2019, New York Governor Andrew Cuomo signed into law the Stop Hacks and Improve Electronic Data Security Act (the “SHIELD Act” or the “Act”), which expands data breach notification obligations under New York law and for the first time imposes affirmative cybersecurity obligations on covered entities.

The Act makes five principal changes

Last month, Representative Jim Himes (D-Conn) and his co-sponsors, Representatives Carolyn B. Maloney (D-NY) and Denny Heck (D-WA), introduced H.R. 2534:  The Insider Trading Prohibition Act.  Unlike its substantially similar predecessor, H.R. 1625, which was introduced by Representative Himes on March 25, 2015, H.R. 2534 has gained some momentum in the U.S. House of Representatives, having been unanimously approved by the Financial Services Committee in May 2019.  Although the bill is only at the preliminary stage, if the proposal eventually proceeds further in the process of becoming law, it will represent a potentially significant shift in and clarification of U.S. insider trading laws.
Continue Reading H.R. 2534: Insider Trading Prohibition Act – Congress Considers Enacting Changes to Insider Trading Law Under Section 10(b)